The number of U.S. geothermal projects under development grew 26 percent last year, as the economy clawed back from recession, according to a report released today by a geothermal trade group.
The 188 projects in 15 states could produce as much as 7,875 megawatts, the Geothermal Energy Association report notes. The association attributed the growth to a combination of state renewable energy portfolio standards, federal investment tax credits, and direct investments through the American Recovery and Reinvestment Act.
The $787 billion federal stimulus, which was signed into law 14 months ago, will result in more than $600 million of technology research at 135 projects in 25 states during the next two years, according to the report. The law's Section 1603 provides a more immediate stimulus -- a cash payment in lieu of a tax credit totaling 30 percent of a project's cost.
The Treasury Department has awarded seven geothermal developers more than $154 million in Section 1603 tax credits, according to agency data. Enel North America, a subsidiary of Italy's Enel SpA, has received more than $61 million for two projects in Nevada.
"Many geothermal developers are building several projects in the U.S., and the cash grant provides them an effective incentive that quickly reduces their debt," said GEA executive director Karl Gawell.
Projects under development will require about $35 billion in direct investments and result in 30,000 full-time and 100,000 construction jobs, Gawell added.
The public incentives are thawing once-frozen credit markets, contended Bob Warburton, acting CEO of the Bend, Ore.-based geothermal developer Vulcan Power Co. The company recently secured a $108 million investment from Denham Capital to develop 300 megawatts of geothermal power in Nevada (Greenwire, Feb. 2).
"The banks are telling us they're ready to help us finance these projects," added Warburton, who joined Gawell in a conference call with journalists this morning.
The United States is first among nations in installed geothermal capacity, with more than 3,000 megawatts online in nine states. California accounts for more than 2,500 megawatts; Nevada is second, with about 427 megawatts online.
Nevada and California have robust renewable portfolio standards -- 25 percent and 33 percent, respectively -- and rank first and second for projects under development. Utah, Idaho and Oregon round out the top five, according to the report.
States east of the Rocky Mountains are also developing geothermal projects with federal funding assistance. Another sign of the energy sector's health is that developers are developing power plants and inking power-purchase agreements with utilities, noted Dan Jennejohn, a Geothermal Energy Association analyst and the report's lead author.
"While geothermal is primarily a Western state renewable energy resource, we are also beginning to see it in new locations," Jennejohn added.
Petroleum-rich Louisiana has two projects under development, totaling more than 5 megawatts. One project would produce geothermal power at a natural gas field, according to the report. The second project, which has been awarded $5 million through the stimulus, will develop geopressured resources at an oil and gas field.
Click here to read the report.
Click here to read a list of companies that are Section 1603 winners.